Doug Ford’s Ontario and the massive debt acquired by Maj (ret'd) CORNELIU. CHISU, CD, PMSC, FEC, CET, P. Eng. Former Member of Parliament Pickering-Scarborough East The Province of Ontario carries one of the largest debt burdens in Canada, largely due to the provincial government’s unwillingness to control spending. This represents a significant drag on provincial finances and a major cost to Ontarians. Heading into budget season, if the Ford government wants to finally tackle the province’s debt problem, it must restrain spending. However, they will obviously not be doing that, for selfish electoral gain. The Ford government released the 2023–24 Third Quarter Finances this week, to provide an update o

n Ontario’s economic and fiscal outlook since the release of the 2023 Ontario Economic Outlook and Fiscal Review (also referred to as the Fall Economic Statement, or FES). The Ontario government, through its Finance Minister Peter Betlenfalvy, tried to make the outlook of the Ontario economy look positive. Some of these whitewashing efforts include the following interpretations to soften the facts. The real GDP growth has been slowing, in part due to the impact of higher interest rates. Following a 0.4 percent increase in the second quarter of 2023, Ontario’s real GDP was unchanged in the third calendar quarter of 2023. The 2023–24 Third Quarter Finances projects a deficit of $4.5 billion in 2023–24, an improvement of $1.1 billion compared to the outlook published in the 2023 Fall Economic Statement. The improvement to the deficit is primarily due to increased revenue and lower interest on debt expense. The 2023 Budget published in March 2023 projected a deficit of $1.3 billion. The government plans to provide its next update by March 31, 2024 as part of the 2024 Budget. “As this year unfolds, our government will continue to take a prudent, responsible approach to managing Ontario’s finances, ensuring there is capacity to respond to economic headwinds while continuing to invest in building Ontario’s future” said Peter Bethlenfalvy. According to a recent study published by the Fraser Institute, Ontario’s net debt is expected to reach $416.1 billion this year, which is 84.9 per cent higher than in 2007/08. Moreover, government debt equals 38.7 per cent of the province’s economy (ranking below only Quebec and Newfoundland and Labrador) and on a per-person basis ranks second-highest at $27,091 (behind only Newfoundland and Labrador). Clearly, Ontario has one of the highest debt burdens in the country. In an article in the Ottawa citizen of 21 February 2024 Grady Munro and Jake Fuss published an interesting analysis of the situation. In their opinion, very little attention is being paid to the increasing debt that the Province of Ontario is facing. Interestingly enough, on the election platform of Peter Betlenfalvy, there was a claim that he was pivotal in downgrading the financial rating of Ontario, during the time of the Kathleen Wynne Liberal government, due to excessive debt. High levels of government debt come with costs, including interest costs. Just like a family that takes out a mortgage, governments must pay interest on the money they borrow. Two main factors determine interest costs: the interest rate and the total amount of debt. An increase in the interest rate and/or an increase in the amount of debt will increase interest costs. Not surprisingly, Ontario’s significant debt burden has produced significant interest costs. In 2023/24, the Ford government will pay $13.4 billion in debt interest, making it one of the largest single items in its budget. This is money unavailable for services or tax relief for Ontarians. To put it into perspective, the government will spend more on debt interest than it expects to spend on post-secondary education. The Ford government borrowed substantial sums of money before, during and after the pandemic and consistently increased spending, thus racking up this massive debt, despite singing a different tune when first elected in 2018. At the time, former Ford finance minister Vic Fedeli pledged to take “immediate action to mitigate this fiscal mess”. Unfortunately, the Ford government’s promises have proven to be empty words. To be fair, successive Ontario governments have increased spending for many years, resulting in persistent budget deficits and ever-growing debt. Over the last 15 years, Ontario has run 14 budget deficits. However, despite promising to change course on the campaign trail, the Ford government has chosen to continue the trend of higher spending and debt accumulation. Even when the government ran an unexpected surplus in 2021/22 due to a revenue surge, it chose to further increase spending and run an unnecessary deficit the following year. Without spending restraint at Queen’s Park, Ontario’s debt problem will only get worse. It is time for the Ford government to finally break its spending habits in Ontario’s upcoming budget. Keep in mind that you, the taxpayer, are paying for the spending habits of this government. Beware! Be aware!